2 min read.Updated: 22 Jul 2021, 02:34 PM ISTLivemint
Customer applications for Buy Now Pay Later (BNPL) credit limit on the platform went up five times in the March-May 2021 period as more people took to planning their finances better
NEW DELHI: Consumer demand rose more than 200% during March-May, the second phase of the lockdown, compared to last year when the country saw nationwide restrictions, as per a survey by ZestMoney, an artificial intelligence-driven EMI financing and "Buy Now Pay Later" platform.
Customer applications for Buy Now Pay Later (BNPL) credit limit on the platform rose five times in the March-May as more people planned their finances better, as per the survey.
ZestMoney analysed company data and surveyed 2,800 respondents across key metros and non-metros to understand consumer demand and how BNPL is fuelling their purchases. Strong consumer behaviour around repayments and bounce rates signalled green shoots of recovery and a revival in consumer demand.
Despite the economic challenges arising due to the pandemic, ZestMoney has witnessed that repayment efficiency improves significantly, with many customers paying well within their repayment period. The company has witnessed an improvement of 40% in bounce rates, while NPAs were 34% less severe in Phase-2, compared to Phase-1 of the lockdown. NPAs continue to be well below 5% for the company.
Commenting on the trend, Lizzie Chapman, CEO and co-founder ZestMoney, said, "We have seen encouraging signs in the second phase of the lockdown, signalling a strong revival in consumer sentiment. Buy Now Pay Later continues to gain traction as customers look for financing options to manage their expenses better. Strong repayment behaviour indicates things are improving at a micro-level with little impact on jobs and income. Interestingly, Tier-2 and -3 markets witnessed stronger revival across parameters. It's a well-rounded growth across categories from electronics to electric bikes."
Some of the findings of the survey are as follows:
~75% respondents stated that they were able to manage their finances better this year, compared to Phase-1
~66% were more optimistic about their job prospects and business this year compared to last year
~57% stated that their finances were not impacted during Phase-2 of the lockdown
~62% respondents indicated that they plan to splurge on big-ticket items, indicating strong demand and a positive consumer sentiment
~Over 53% respondents had opted for BNPL between April to June 2021
The top categories that respondents were likely to spend on in the coming months include smartphones, electronics, fashion, home décor, water purifiers and air tickets.
"The overall optimism and strong demand for our BNPL offering give us the confidence to cross $1 billion in GMV run rate this year. We have the largest merchant network of 3,500 online and 45,000 offline stores across the country and are doubling down on partnerships. This will help our customers transact at more touchpoints and categories. We are also adding thousands of new customers every day, especially from the new to credit segment in non-metro cities that love BNPL and online shopping convenience. We continue to remain optimistic and are bullish on the opportunity for BNPL solutions in India", added Chapman.
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